China's currency is oversupplied, why is there no inflation?

Money is a means to adjust the economy, such as monetary policy. Open market operations include the amount of money issued. Issuing money is originally an economic stimulus model, which stimulates inflation expectations and drives the supply side from the shortage of demand. Then, there is no inflation, which means that the currency circulation is still managed and controlled, that is, inflation is within a reasonable range, such as less than 3%, which is good.

If it is too high, it will have a fictional effect on the economy. The absence of inflation also shows that the possibility of price inflation caused by excessive money has been absorbed by a certain field, that is, the field of asset investment.

In Keynesian economics, the reason of information expansion is that the change of total supply and total demand in the economy leads to the movement of price level. In monetarist economics, the reason is that when the amount of money circulating in the market exceeds the amount of money needed for circulation, paper money will depreciate, prices will rise, leading to a decline in purchasing power, which is inflation. This theory is summed up in a very famous equation: MV=PT.

Unlike currency depreciation, overall inflation is the decline of currency value in a specific economy, while currency depreciation is the decline of relative value of currencies among economies. The former affects the value of money used in China, while the latter affects the value of money in the international market. The correlation between them is one of the disputes in economics. Inflated goods refer to "money".

Baidu encyclopedia-inflation